Reimbursement from 529 plan for off-campus room and board - if the college lists separate COA for room and board does that limit the tax-free reimbursement for each?

[DanFarrell]

My grandson will be attending a junior college full time.  He will be staying off-campus.  The college's COA lists $5,757 for room and $5,757 for food.  If the actual rent is higher than $5757, but no reimbursement is sought for the food, would the distribution of $8,000 for rent alone all be nontaxable?  or only up to $5757?

[Hal_Al]

Q. f the college lists separate COA* for room and board does that limit the tax-free reimbursement for each?

A. Yes.

Q.  Would the distribution of $8,000 for rent alone all be nontaxable?  or only up to $5757?

A. Only the $5757

Q. No reimbursement is sought for the food?

A.  You should  use the 529 plan to reimburse food cost.  Normally, I  advise not to bother with receipts, just use the school's meal plan cost or allowance for attendance.  The IRS will, most likely, accept that. But, $5757 seems high (my local state college is half that).  Use the school's "meal plan" charge, if lower. 

*529 money can be use for off campus living, but you are limited to the lesser of your actual costs or the school's "allowance for cost of attendance" (COA) (basically what on campus students pay for Room & Board).

The student must be half time or more. 

[DanFarrell]

This Junior College does not have a meal plan (no campus housing or dining rooms).  It does list the COA for room at $5757 and the food at $5757.  His parents and I want him to be responsible for paying some of his own expenses, and I would prefer having a clear record of distributions against receipts.  His apartment rental is $780/mo and he is signing a 12 month lease.  Any advice?

[Hal_Al · Accepted solution]

Q. I would prefer having a clear record of distributions against receipts.  His apartment rental is $780/mo and he is signing a 12 month lease.  Any advice?

A.  Yes. Take a 529 distribution for food ("board") and go to the trouble of keeping food receipts.  For "room" (rent) you cannot count the full 12 months, only the months he was in attendance.  Plan B: look up the meal plan cost at a near by college and use that amount (if less than your school's board allowance). Plan C: just use the school's $11,514 total R&B allowance.